Recently, in the United States of America, big tech companies, consumer giants, and retail companies expressed concerns about the approaching recession, which is an unstable economy caused by inflation and changes in consumer spending habits.
Ruth Porat, Google’s CFO, described the state of the economy as follows, “We use the term uncertainty because we … think that’s the best way to characterize what we’re seeing.” Financial data from all the other big tech companies supported Porat’s words. Generally, these technology corporations experienced growth in profits and slight decreases in consumer spending momentum.
High inflation levels caused the decreased consumer spending momentum. In a statement published on Wednesday, July 27, 2022, Corie Barry, Best Buy’s CEO, reported, “As high inflation has continued, and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened.” In agreeance, Doug McMillon, Walmart’s CEO, explained that the expensive gas and food prices significantly decreased consumers’ ability to purchase clothing, electronics, and other desired goods.
On July 27, the Federal Reserve increased the national interest rates by another three-fourths of a percent in hopes of stabilizing the economy and counteracting inflation. The United States Government provided more evidence of economic instability through reports of slightly increased consumer spending and decreased gross domestic product.
Similar to the decreased consumer spending momentum, the high inflation levels also caused slightly increased consumer spending. According to consumer data from Friday, July 29, the Bureau of Economic Analysis reported that purchases of electronics and clothing decreased due to the increased money spent on gas and food.
Compensating for the drastic changes in consumer spending habits, companies hired fewer people and laid off more employees to ensure financial stability. Google and Amazon announced that the hiring slowdown will continue into 2023. Furthermore, on Tuesday, July 26, Shopify announced plans to lay off 10 percent of its employees.
Although the United States has not experienced an official economic recession in 2022, many large companies have expressed a mixture of positive and negative financial reports. The economic uncertainty in 2022 might be a precursor to the next economic downturn. In the words of Amazon warehouse worker Shannon Villa, “I just got to adjust.”
Just like Villa, the companies, consumers, and the government of the United States need to adapt to the continuously transforming economy to stay afloat financially.
Sources:
https://s3.amazonaws.com/appforest_uf/f1659260658010x372290339911993200/Corporations%20on%20the%20front%20lines%20of%20the%20economy%20say%20cracks%20are%20forming%20-%20The%20Washington%20Post.pdf
https://investors.bestbuy.com/investor-relations/news-and-events/financial-releases/news-details/2022/Best-Buy-Provides-Update-on-Second-Quarter-Performance-and-Fiscal-2023-Outlook/default.aspx
https://corporate.walmart.com/newsroom/2022/07/25/walmart-inc-provides-update-for-second-quarter-and-fiscal-year-2023
https://www.washingtonpost.com/business/2022/07/27/fed-rate-hike/?itid=lk_inline_manual_14
https://www.washingtonpost.com/politics/us-economy-likely-grew-modestly-if-at-all-last-quarter/2022/07/28/7df7c2be-0e66-11ed-88e8-c58dc3dbaee2_story.html
https://www.washingtonpost.com/business/2022/07/29/consumer-spending-june/?itid=lk_inline_manual_42
https://news.shopify.com/changes-to-shopifys-team
Ruth Porat, Google’s CFO, described the state of the economy as follows, “We use the term uncertainty because we … think that’s the best way to characterize what we’re seeing.” Financial data from all the other big tech companies supported Porat’s words. Generally, these technology corporations experienced growth in profits and slight decreases in consumer spending momentum.
High inflation levels caused the decreased consumer spending momentum. In a statement published on Wednesday, July 27, 2022, Corie Barry, Best Buy’s CEO, reported, “As high inflation has continued, and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened.” In agreeance, Doug McMillon, Walmart’s CEO, explained that the expensive gas and food prices significantly decreased consumers’ ability to purchase clothing, electronics, and other desired goods.
On July 27, the Federal Reserve increased the national interest rates by another three-fourths of a percent in hopes of stabilizing the economy and counteracting inflation. The United States Government provided more evidence of economic instability through reports of slightly increased consumer spending and decreased gross domestic product.
Similar to the decreased consumer spending momentum, the high inflation levels also caused slightly increased consumer spending. According to consumer data from Friday, July 29, the Bureau of Economic Analysis reported that purchases of electronics and clothing decreased due to the increased money spent on gas and food.
Compensating for the drastic changes in consumer spending habits, companies hired fewer people and laid off more employees to ensure financial stability. Google and Amazon announced that the hiring slowdown will continue into 2023. Furthermore, on Tuesday, July 26, Shopify announced plans to lay off 10 percent of its employees.
Although the United States has not experienced an official economic recession in 2022, many large companies have expressed a mixture of positive and negative financial reports. The economic uncertainty in 2022 might be a precursor to the next economic downturn. In the words of Amazon warehouse worker Shannon Villa, “I just got to adjust.”
Just like Villa, the companies, consumers, and the government of the United States need to adapt to the continuously transforming economy to stay afloat financially.
Sources:
https://s3.amazonaws.com/appforest_uf/f1659260658010x372290339911993200/Corporations%20on%20the%20front%20lines%20of%20the%20economy%20say%20cracks%20are%20forming%20-%20The%20Washington%20Post.pdf
https://investors.bestbuy.com/investor-relations/news-and-events/financial-releases/news-details/2022/Best-Buy-Provides-Update-on-Second-Quarter-Performance-and-Fiscal-2023-Outlook/default.aspx
https://corporate.walmart.com/newsroom/2022/07/25/walmart-inc-provides-update-for-second-quarter-and-fiscal-year-2023
https://www.washingtonpost.com/business/2022/07/27/fed-rate-hike/?itid=lk_inline_manual_14
https://www.washingtonpost.com/politics/us-economy-likely-grew-modestly-if-at-all-last-quarter/2022/07/28/7df7c2be-0e66-11ed-88e8-c58dc3dbaee2_story.html
https://www.washingtonpost.com/business/2022/07/29/consumer-spending-june/?itid=lk_inline_manual_42
https://news.shopify.com/changes-to-shopifys-team
